Pediatrix Continues Its Buying Spree

Firm On Pace To Buy $50m In Practices

January 25, 2005|By Glenn Singer Business Writer

With a week left in January, Sunrise-based Pediatrix Medical Group Inc. already has made three acquisitions this year and is on target to buy between $50 million and $60 million worth of physicians' practices in 2005, company officials said on Monday.

"That's pretty much the same rate as 2004. We're comfortable with that rate, and we're very excited about the pipeline for this year," said Karl Wagner, the firm's chief financial officer.

Pediatrix, founded in 1979, provides physicians and nurse practitioners who specialize in maternal-fetal and newborn care. The firm has grown largely through acquisitions and employs some 775 physicians in 31 states and Puerto Rico. Wagner said he expects some acquisitions this year to be in new markets.

Since Jan. 1, Pediatrix has purchased a neonatal physician group that practices in Atlanta's South Regional Medical Center in Riverdale, Ga.; a neonatal group that works at two neonatal intensive care units in Macon, Ga., and two physician practices responsible for managing the neonatal intensive care unit at Central California Children's Hospital in Madera.

In addition to potential acquisitions, company officials are keeping a close eye on proposed reforms in Medicaid -- state-run programs for the medically needy. Medicaid patients represented 48 percent of the volume in 2003 and brought in 25 percent of the net revenue.

"We've heard a lot of talk about Medicaid reimbursement changes and Medicaid reform, but so far we don't foresee an impact on our business," Wagner said. "Some states have even talked about increases in their programs. But it's a long road between discussions and actual increases."

Pediatrix repurchased $150 million of its stock in 2004, but no buyback program has been implemented this year. Wagner said he expects the board of directors to take up that possibility in the second quarter.

"We have a significant need for cash in the first quarter, so we typically don't talk about repurchases that early in the year," he said.

He added that the company has no plans to pay a dividend, preferring to use available cash for acquisitions, which in turn translate to increased shareholder value.

Pediatrix stock closed on Monday at $65.60, up 28 cents. Shares have risen about $13 a share since mid-October.

Glenn Singer can be reached at gsinger@sun-sentinel.com or 561-243-6612.